UK government criticised about Rover collapse

London - The British government was criticised on Friday for throwing millions of rands into an ill-fated attempted to keep collapsed car manufacturer MG Rover Group afloat.

The National Audit Office, which keeps tabs on government spending, said that it should have been clear that the prospect of Rover agreeing to a deal with Shanghai Automotive Industry Corporation - on which the government pinned its hopes - was remote.

The government ploughed £6,5-million (R70,7-million) in bridging loans into Rover, the country's last major carmaker, when it went bankrupt just before a general election.

But the lifeline failed, the SAIC deal did not materialise and the company folded with the loss of 6 000 jobs at its Longbridge plant in central England.

"Given the messages coming from SAIC's advisers, the prospect of achieving a going concern sale was remote," the audit office said in its report. "We therefore doubt whether the Department obtained sufficiently good value for the loan, of which £5,2-million will probably not be repaid."

The Longbridge closure and the accompanying job losses provided an embarrassing backdrop to last year's general election for the ruling Labour Party, whose poll campaign centered on the strength of the British economy.

The government "could and should have been far more effective at contingency planning for what was always likely to become a fast moving crisis," said Edward Leigh, the chairman of the Public Accounts Committee and an opposition Conservative Party lawmaker.

The government said earlier this week that around 4 000 of the workers were back in work, mostly in full-time employment, and announced a new £2-million package to help the remaining 1 850 workers.

The task force also pledged £3-million to set up a vocational training center for 14- to 19-year-olds in the Longbridge area. As well as the direct Rover jobs, several thousands more were lost at supply companies to the plant.

China's Nanjing Automobile last month signed a 33-year lease for the Longbridge site and said it would begin producing sports cars at the factory next year.

However, the new lease - with rent pegged at around £1,8-million a year - incorporates a six-month break clause in case Nanjing is unable to confirm a viable long-term future for the site.

The department of trade and industry said on Friday it was confident it "did a good job in challenging circumstances and carried out its duties fully and diligently". - Sapa-AP